Despite a recent slowdown in activity due to concerns over a possible recession, companies of all sizes and representing every industry have used a consolidation strategy — mergers, acquisitions, and other actions — to gain strategic advantages. These include stimulating growth, gaining competitive advantages, increasing market share, or influencing supply chains. This final objective — influencing supply chains — was especially relevant during the disruptions of the supply of raw materials and finished goods during the COVID pandemic.
This consolidation strategy has had mixed results in terms of success or failure for the new enterprise, and one of the challenges involves the technology for human capital management (HCM) in the newly formed organization. Sorting out the redundancies inherent in two or more companies consolidating and now being one enterprise often becomes the task of outsourced experts in HCM. Asinpa is such an expert.
Making a newly consolidated enterprise more efficient requires expertise that is typically not available “in-house.” A company like Asinpa, which operates as an outsourced technology resource, provides software architecture consulting and enterprise software solutions. The consultants at Asinpa are experts in designing large-scale systems like HR, payroll, and benefits administration, which are often overlapping in newly consolidated companies.
Recently, the founder and CEO of Asinpa, Gustavo (Tavo) Vasconcelos, offered his thoughts on the primary HCM challenges for companies that are merging or acquiring new enterprises.
“Employee retention is always a challenge,” he said. “And companies have gotten more creative with retention packages. However, managing the risk and ensuring everyone understands how they are adding value is key.
“Technology and its process disparity is also a major challenge. The technology ‘stacks’ of the merging companies and the way they conduct business, which are the processes (whether they are technical, operations, or sales), are always a difficult challenge.”
“Platform consolidation strategy is also a huge challenge for the new enterprise. This involves dealing with several factors, including:
- Feature Gap: Once the feature comparison is done, the new organization must shift its focus on the feature gaps between the systems in order to then migrate its customers.
- Data/Client Migration: This is where the rubber meets the road! Some companies opt to ‘farm’ a platform by stopping selling on it and only migrating what’s possible while leaving the delta to the end before deciding what to do with them. Other companies put a full strategy in place to migrate all clients while keeping an eye on attrition post-migration.
- Technical Debt: This results from adding more features and clients quickly, which many times forces teams to cut corners on design and code quality pushing existing systems to become less performant, creating undue pressure on systems and staff.”
Consolidation Or Integration?
“Many companies opt to simply integrate their systems as they grow by acquisitions,” Tavo notes. “This Integrating systems strategy ‘works’ if the systems don’t overlap. Otherwise, you’ll have competing products within your own organization.
“Consolidating systems is typically a much longer effort as you have to prepare the receiving system to make sure it can absorb all clients, features, and functions. The end result of a system consolidation is that you get to keep only one and ‘sunset’ the other.”
Coordinating a Consolidation Strategy: Asinpa’s Role
“Asinpa can help companies in several aspects of the consolidation journey,” Tavo concludes. “We can help build the right plan to consolidate systems, and we can also execute that plan. “
“In addition to budget sensitivity, these projects are driven by Client/Revenue retention. We understand how important it is to keep these factors as priorities and to incorporate a quick feedback loop as progress is made. This allows us and our clients to adjust tactics based on empirical learnings gathered from those feedback cycles. This is agile development at its best!”